Slovenia's government has announced an austerity plan designed to raise 540 million euros in new taxes as part of an effort to balance the budget and avoid seeking an international bailout.

The small Alpine country is racing to convince investors it has a credible strategy for raising the funds to stay solvent.

In addition to the hike in the country's sales tax from 20 percent to 22 percent, the government said it will privatize several state-run companies including the country's second-largest bank, Nova Kreditna Banka Maribor (NKBM); communications operator Telekom Slovenija; airline Adria Airways; Ljubljana airport and Elan ski manufacturer.

The austerity plan has to be approved by Slovenia's parliament and will be handed to the European Union's executive arm, the Commission, which is expected to discuss it this month.